As inventories shrink oil prices float up to $50
Crude oil settled above $50 a barrel for the first time since June, pushed higher by solid demand, falling U.S. stockpiles of petroleum products, and OPEC’s promise to cut production.Of the things listed for the reason for the price rise, the weakest is OPEC's "agreement" to cut production. Nigeria and Libya were exempt from the proposed cuts and they have already increased production much more than Saudi Arabia is cutting. Iran is also trying to get back to its pre-sanction levels.
West Texas Intermediate, the U.S. benchmark for oil, settled at $50.44 barrel in New York, continuing a rally that began Sept. 28 when the Organization of the Petroleum Exporting Countries reached an agreement to cut production by as much as 750,000 barrels a day in an effort to reduce a worldwide glut of oil and raise prices. Prices have climbed more than 10 percent since the deal was announced, but it still must be finalized at OPEC’s formal meeting in Vienna next month.
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A steady drop in U.S. crude inventories against a backdrop of growing demand is also supporting prices. The Energy Department reported Wednesday that commercial stockpiles fell by about 3 million barrels last week, the fifth consecutive week of declines. Although still historically high, crude inventories have fallen by more than 40 million barrels since peaking in April, slipping below 500 million barrels last week for the first time since the beginning of the year.
Demand for petroleum products, meanwhile, is rising. U.S drivers consumed an average of 9.3 million barrels a day over the past four weeks, up more than 3 percent from a year earlier. Consumption of all petroleum products, averaging nearly 20 million barrels a day, has also risen from about a year ago.